Dubai Real Estate: Over 290,000 Residential Units Under Construction
Overview of Dubai’s Residential Construction Boom
Dubai’s real estate market is undergoing a significant transformation, with more than 290,000 residential units currently under construction. This figure represents 55% of the total existing residential property supply, highlighting a robust development pipeline that is set to reshape the market dynamics in the coming years. The latest Q2 2024 Dubai Residential Real Estate Market Report by Real Trust UAE indicates that the influx of new units will lead to notable shifts in both pricing and demand
Areas for New Developments
Jumeirah Village Circle (JVC)
Jumeirah Village Circle is slated to receive 30,000 new residential units, which is equivalent to 80% of its current housing stock. This addition is expected to alleviate some of the intense market pressures experienced in this highly sought-after area, where property prices have more than doubled over the past few years.
Business Bay
Business Bay, another high-demand region, will see the construction of 20,000 new residential units. This influx aims to address the escalating prices and supply shortages that have characterized the area, contributing to a more balanced real estate landscape.
Dubai South
With the announcement of a new airport, Dubai South is emerging as a promising hotspot, projected to receive 14,000 new homes. This development is poised to stimulate further growth in this strategic location, making it an attractive option for both investors and residents.
Impact on Market Dynamics
Price Adjustments
The introduction of a substantial number of residential units is expected to alter the supply-demand dynamics significantly. According to Real Trust, these developments may lead to adjustments in both sales and rental prices over the next few years as the market shifts from a seller’s to a buyer’s market.
Changes in Listing Prices
The report indicates a 5% month-on-month decline in median residential listing prices since September of the previous year. This trend reflects the ongoing transition in market conditions, suggesting a potential easing of previous price pressures.
Increase in Days on Market
The average time properties are listed for sale has also increased from 30 days last year to over 90 days. This indicates a cooling off of the frantic buying environment that previously characterized Dubai’s real estate market.
Performance of the Secondary Market
Sales Transaction Volume
The secondary market is experiencing a slowdown, with a 2.9% quarter-on-quarter decline in residential sales transactions in Q2. This marks the second consecutive quarter of decline in this segment, underscoring a shift in buyer behavior and market sentiment.
Price Trends
Despite the decline in transaction volume, the median sales price for residential secondary transactions increased to AED 1.4 million, reflecting a 5% rise from Q1. This suggests that while sales may be down, prices are still holding steady in certain segments.
The Off-Plan Market’s Resilience
Active Off-Plan Market
The off-plan segment of Dubai’s real estate market remains robust, with 78,361 new units launched in 2024 alone. This area has seen an 18% quarter-on-quarter increase in off-plan sales transactions and an impressive 64% year-on-year growth.
Pricing Trends in Off-Plan Sales
The median off-plan sales price in Q2 was AED 1.54 million, marking a slight 0.6% decline from Q1, indicative of a market that is adapting to changing conditions while still maintaining momentum.
Developer Strategies
Real estate developers are responding to evolving market conditions by offering more competitive products. Approximately 34% of newly launched projects feature post-handover payment plans ranging from 12 to 120 months, making homeownership more accessible.
Population Growth and Market Evolution
Dubai’s population is on an upward trajectory, with 25,776 new residents recorded in Q1 2024, bringing the total to 3,680,785. This ongoing growth is expected to sustain demand for housing, further influencing the real estate landscape.
